Beyond Price Volatility

Welcome back crypto enthusiasts, to the weekly instalments of the latest news, topics and worldwide updates from Magnet Capital.

 

This week’s hot topic - Network Advancements

In the midst of the constant pricing discussion, what advancements are happening to improve the blockchain technology behind the scenes?

 

Bitcoin

Schnorr multi-signature

A proportion of the available block size in Bitcoins blockchain is taken up by the sender/received signature in every transaction - Schnorr technology makes a fairly simple and elegant solution of systematising digital signatures and combining signatures when sending multiple transactions to one receiver.

Improves: Scalability, privacy and reduces spam

Outcome: 25% increase in network bandwidth, block size reduction by 25%

 

Lightning

Lightning is the first major implementation on off-chain transaction services for Bitcoin. The technology is currently being stress tested, many are already using it with positive feedback. See our blog post on Lightning.

Improves: Scalability, speed and transaction cost

Outcome: Instant transaction time with open and active payment channels

 

Ethereum

Metropolis

The 3rd stage in a 4 step process to improving the Ethereum blockchain. Metropolis aims to implement zk-SNARKS (privacy protocol), early Proof of Stake (PoS) implementation (updated mining algorithm), account abstraction and upgraded smart contract flexibility. The early PoS increases mining difficulty and enables 1/100 blocks to be mined using PoS in preparation for Serenity (see below). Expected: Q2/3 2018.

Improves: Privacy, scalability and flexibility

Outcome: Hard fork potential, private transactions and more difficult mining   

 

Serenity

The 4th and final stage of the current Ethereum roadmap. The 100% moveover to PoS. Casper (mining protocol), will be implemented as the PoS consensus algorithm as part of Serenity. No date has been set for this, but likely mining pools will start hoarding ETH to Stake and collect a reward.

Improve: Mining economics

Outcome: Considerably less electricity used to power the network

 

Raiden Network    

Raiden is the Lightning for Ethereum - it utilises off-chain transactions through payment channels to scale the number of transactions that can be processed at any one time without broadcasting all of those transactions to the network. When payment channels expire the balance sheet is broadcast to the Ethereum Blockchain.

Improves: Scalability, speed and transaction costs

Outcome: Instant transactions, long open-ended smart contracts

 

Verge

Wraith

Wraith Protocol is a technology that allows the user to seamlessly switch between public and private ledgers on the Verge Blockchain. For the first time, users are now free to choose which ledger they want to utilise. To break it down, when Wraith Protocol is turned ON  -  the transaction data is hidden and not visible via the blockchain explorer. Tor integration allows for IP addresses to be hidden.

Improves: Privacy

Outcome: Complete flexibility for untraceable accounts, payments and transactions

 

 

Magnets Take

 

While mainstream media, retail buyers and the Bitcoin 101 readers are interested in price predictions for the next week, all time highs and where to make the next 5x ICO investment, the real work is being done behind the scenes. This work is helping scale blockchain technology and prepare crypto assets for mass adoption. It’s important to look beyond the price of crypto projects. Some of the challenges faced by all crypto assets are incredibly complex, and will likely take time to be properly tested and released. These updates to the networks create real value for existing projects which have been continually tested, attacked, improved, moulded and used for multiple years over, compared to a new and exciting one-size fits all Blockchain ICO with a promise and no product.

Magnet is keeping a diligent eye on developing projects where teams of the smartest blockchain developers are working to fix macro blockchain problems such as scaling and global usability. Slow and expensive transactions means the demand for the crypto asset outpaces the capacity of the network which if resolved will lead to future applications and greater levels of adoption. Becoming part of these projects early means you stand to make the most from their success.

 

Bites

 

Tezos - one of the largest ICO’s of all time, that has been plagued by controversy and multiple looming lawsuits surrounding its founders and the appointed foundation has released a statement reorganising the foundations board. The unpopular chairman and Johann has been replaced - could this be the first signs of access to their ~US$400M fortune?


 

Adoption

  1. Venezuela releases their own currency, backed by oil - oil is the last commodity Venezuela have that trades internationally. Petro coin is pegged to future oil supply (1 barrel of oil). Best of luck claiming your barrels off the government.

  2. The UN is trialling the Ethereum blockchain as part of their International Food Program - The trail being run for 100,000 Syrian refugees in Jordan will replace services offered by banks with blockchain and is touted to save approximately $150,000 per month.

  3. Venezuelan president orders government services to accept cryptocurrency as method of payment - One of the better ideas the government have is accepting cryptocurrencies as payment for government services.

  4. Austria has joined the list of countries planning to regulate cryptocurrencies - it will use models of existing rules for the trading of gold and derivatives.

  5. Georgia Becomes Latest State to Consider Bitcoin for Tax Payments - Two state senators in Georgia have proposed a bill that would allow citizens to pay their tax obligations in bitcoin, marking the second legislative effort of its kind to emerge this year.

 

Fork Update

Bitcoin private - Bitcoin Private is still set to launch 2 days after the ‘snapshot’ taken on the 28th of Feb. The snapshot of the ledger will determine token holders at a point in time to be replicated for the new Bitcoin Private blockchain.

 

The Market

  • This week crypto assets tapered off slightly from their strong run last week. In a fairly uneventful news week, there was not much price movements and ICO interest started to taper. This is typically a good sign for existing tokens.

  • One of the top global exchanges, Poloniex, is getting acquired by Circle group - Poloniex transacts around $150m daily from the top 10 crypto assets alone.

  • Bitcoin dominance on the market has risen back to 38.5% from all time lows of 33% - which is still about half what it was in 2014, 2015, 2016 and 2017.

Egor Sidelska